Join our daily newsletter At The Bell to receive exclusive market insights
- The Australian consumer watchdog has flagged concerns over software company MYOB’s proposed purchase of cloud management business GreatSoft
- The ACCC said the new business could potentially lessen competition in the accounting software market
- In fact, ACCC Commissioner Stephen Ridgeway said if MYOB buys GreatSoft, the combined business would be one of only three major suppliers of practice management software to medium-to-large accounting firms in Australia
- It seems the ACCC believes GreatSoft could becoming a key competitor in the software space based on its speciality in cloud-based accounts management
- This is the second proposed MYOB acquisition to be flagged as a competition concern by the ACCC after MYOB tried to buy Reckon in 2018
- The ACCC will make its final decision on whether or not the MYOB-GreatSoft deal can go ahead on April 22, 2021
The Australian consumer watchdog has flagged concerns over software company MYOB’s proposed purchase of cloud management business GreatSoft.
The Australian Competition and Consumer Commission (ACCC) said the new business could substantially lessen competition in the accounting software market, which is MYOB’s area of expertise.
ACCC Commissioner Stephen Ridgeway said if MYOB buys GreatSoft, there would only be three major suppliers of practice management software to medium-to-large accounting firms left in Australia: MYOB, Reckon, and Xero.
“GreatSoft is a new entrant that has won several medium-to-large MYOB customers, and we are looking into its potential to grow stronger,” Stephen said.
It seems GreatSoft’s speciality in cloud-based accounts management is what the ACCC thinks gives it the potential to stand out from the crowd.
“We received feedback that accountants now have a strong preference to move from traditional desktop-based software, like MYOB’s, to online ‘cloud’ software,” he explained.
“While GreatSoft’s customer base is currently small, the ACCC is investigating its potential to become a strong competitor as it appears to be a viable choice for many medium-to-large firms wishing to migrate to the cloud.”
He said it’s difficult for new competitors to enter the market and though GreatSoft has faced some challenges in its two years of operating in Australia, the ACCC believes it may now be well-placed to overcome them.
As such, letting the MYOB takeover go forward could remove an important upcoming competitor in the accounting software space.
This is the second proposed MYOB acquisition to be flagged as a competition concern by the ACCC. In 2018, the ACCC raised similar concerns about MYOB’s potential buyout of Reckon.
Not long after the watchdog first voiced its concerns, MYOB pulled out of the $180 million deal, deciding instead to develop its own business rather than take on a new one.
MYOB reported $445 million in revenue over 2018, with net profit after tax of $104 million.
So far, neither MYOB or GreatSoft have publically commented on the ACCC’s warning.
Of course, the ACCC’s warning does not mean the deal is off; both parties now have the chance to make submissions to the consumer watchdog before March 5. The ACCC will then make its final decision on whether or not the deal can go ahead on April 22, 2021.
